Washington Week: Medicare Physician Pay Cut Announced

WASHINGTON -- The Centers for Medicare and Medicaid Services (CMS) made official what everyone already knew -- doctors will face a huge cut in Medicare payments next year unless legislative action prevents it -- and President Obama issued an executive order telling the FDA and the Justice Department to do what it takes to address medication shortages.

The agency acknowledged, however, that the cut likely won't go into effect.

"This is the eleventh time the SGR [sustainable growth rate] formula has resulted in a payment cut, although the cuts have been averted through legislation in all but CY 2002," CMS said in a statement. The agency acknowledged, however, that it is "required to issue a final rule that reflects current law."

CMS had previously projected the 2012 rates would be cut nearly 30%, so the reduction announced Tuesday is lower than expected, largely because Medicare spending has been slower than expected.

The Obama administration said it won't allow the cuts to happen.

"We have not and will not let deep cuts to doctors' payments occur," Health and Human Services Secretary Kathleen Sebelius said in a statement. "The Obama administration is 100 percent committed to fixing the flawed Medicare payment system and protecting Medicare beneficiaries' access to doctors."

Obama Issues Drug Shortage Executive Order

President Obama issued an executive order directing the FDA to take steps to prevent future drug shortages and also directed the Justice Department to look into charges of drug-hoarding and price-gouging by secondary wholesalers, as well as whether "gray-market" profiteers are exploiting potential drug shortages by hoarding medication or charging exorbitant prices.

During a signing ceremony at the White House, President Obama said the number of drug shortages has tripled in the past five years, although he credited FDA actions for preventing a crisis.

"This is one of those slow-rolling problems that could end up resulting in a disaster for patients and for healthcare facilities all across the country," Obama was quoted as saying in a statement released by the White House.

But the shortages -- which have mostly affected cancer drugs -- may simply be due to inadequate manufacturing capacity, federal health officials said.

A huge transition from brand-name to generic drugs has created a demand that the generic pharmaceutical industry has not been able to meet, according to Health and Human Services assistant secretary Sherry Glied, PhD, whose office studied the shortage, focusing on oncology drugs.

In addition to the executive order, the Obama Administration has initiated other actions aimed at heading off drug shortages before they occur. According to a statement from the White House, the administration will send a written notice to drug manufacturers, reminding them of their legal obligation to notify the FDA of any planned drug discontinuations. The administration also plans to increase staffing in the FDA Drug Shortages Program.

FDA Approves Near-Record Number of Drugs

The FDA announced it has approved 35 new drugs in the past 12 months -- just two shy of a record for the decade -- including two new treatments for hepatitis C, the first new drug for Hodgkin lymphoma in 30 years, and the first new drug for lupus in 50 years.

The report comes as the agency is dodging criticism for moving too slowly on new drug approvals. As a result, critics claim, drugs get approved first in foreign countries that have a more lax regulatory climate, and drug companies may begin moving overseas.

But the U.S. was first to approve 24 of the 35 new drugs in fiscal 2011, which ended Sept. 30, "continuing a trend of the U.S. leading the world in first approval of new medicines," the FDA said in a press release.

Seven of the new medications approved provide "major advances" in cancer treatment, according to the FDA; and 10 of the 35 drugs are for rare, so-called "orphan" diseases, which have few or no treatment options.

Woodcock said the high number of approvals shows the agency is flexible in working with drug companies seeking approval.

Woodcock also pointed to the user fees collected from drug companies as a key reason for the large number of approvals. Woodcock said user fees have enabled CDER to hire more staff, which has improved the drug approval process.

Next Week

On Wednesday, the Senate Judiciary Committee's subcommittee on Privacy, Technology, and the Law will hold a hearing about protecting health information in a digital world. The following day, the Institute of Medicine is slated to release a report on health information technology and patient safety.

The Senate Health, Education, Labor and Pensions Committee will hold a Thursday hearing called "Improving Quality, Lowering Costs: The Role of Health Care Delivery System Reform."

Also on Thursday, the Alliance for Health Reform will hold a discussion on how Medicaid might be affected by cuts proposed by the deficit reduction panel, otherwise known as the "super committee".

Accessibility Statement

At MedPage Today, we are committed to ensuring that individuals with disabilities can access all of the content offered by MedPage Today through our website and other properties. If you are having trouble accessing www.medpagetoday.com, MedPageToday's mobile apps, please email legal@ziffdavis.com for assistance. Please put "ADA Inquiry" in the subject line of your email.